MARKET MASTER(tm) USER'S GUIDE You are free to copy and distribute the original or archived copy of the shareware version (Version MMT453) of MarketMaster(tm) for your or others' trial use PROVIDED: IT IS DISTRIBUTED WITH ALL ORIGINAL PROGRAMS AND SUPPORT FILES AND DOCUMENTATION; YOU DO NOT CHARGE MORE THAN A NOMINAL FEE OF US$10 FOR EXPENSES AND COST OF HANDLING WHILE DISTRIBUTING THIS SOFTWARE FOR TRIAL USE. MarketMaster(tm) Ver. MMT453 is distributed as "as is" and for trial use. Trial use does not extend to later or other Series or Versions, nor accessories, unless expressly so declared in writing by the publisher, R.M.C. THE RELEASE OF A LATER VERSION NUMBER IS AUTOMATIC NOTICE THAT ALL PRIOR VERSIONS ARE NO LONGER TO BE CIRCULATED AND ARE WITHDRAWN FROM PUBLIC USE. THEREFORE, AS OF 11-25-93, ALL PRIOR SHAREWARE VERSIONS OF MARKETMASTER MAY NO LONGER BE USED OR CIRCULATED. THE ONLY VERSION THAT MAY CIRCULATE AND BE USED IS THIS VERSION, DENOTED IN COMPRESSED FILE AS MMT453.EXE, OR MMT453.ZIP OR MMT453.LZH. IF YOU DO NOT AGREE WITH ANY OF THE ABOVE TERMS, YOU SHOULD IMMEDIATELY CEASE THE USE OF THIS PROGRAM -- MARKETMASTER(tm). IF YOU AGREE WITH ALL THE ABOVE TERMS, THEN YOU MAY FURTHER PROCEED: MarketMaster(tm) Version/Release number follows this pattern: Version Number | Shareware Version -- MMT 4 5 3 / \ Release Level Correction Level GET COMMERCIAL VERSION: After your trial period (30-60 days) if you are serious about investing, you would be wise to order the commercial version of MarketMaster(tm). Commercial version provides you with the very latest price forecasts. To order a commercial version, please use the Order Form in the accompanying file ORDER_FM.TXT, or call R.M.C. at 408-773-8715 or write to us at the address below: R.M.C. P.O. Box 60842 Sunnyvale, CA 94088-0842 U.S.A. Phone: 408-773-8715 CHECK, MONEY ORDER ACCEPTED. PLEASE SPECIFY DISKETTE SIZE. MarketMaster is copyrighted. Copyright(c) 1989-93 by R.M.C. You may not decompile, disassemble or reverse engineer any version of MarketMaster, nor modify MarketMaster itself without prior written consent from R.M.C., or act in any way that impairs the proprietary and intellectual property rights of R.M.C. or its successors and assigns. R.M.C. retains the title and ownership of the MarketMaster programs and support files but grants you a lease and license for their use, provided that you abide by the terms herein. The author, manufacturer and publisher retain all rights to the program and support files and can make changes to them, or withdraw them from public use altogether, at their sole discretion and without notice. Your use of MarketMaster constitutes representation that you are fully aware of the inherently uncertain nature of forecasting, and in particular financial forecasting, as well as the risks inherent in buying and selling in the financial markets, and that the output of MarketMaster does not constitute "advice" or "recommendations", and that past performance is no guarantee of future results. DEAR INVESTOR/TRADER: Thank you for trying Market Master, the world's most accurate and versatile price forecasting software. Even though you are eager to start running Market Master right away, you will gain the most, if you take the next twenty minutes to carefully read through this user's guide. Refer to it again to refresh your memory or understanding if anything remains unclear. Please note that the shareware version is aged 5 days when compared with the commercial version, i.e. you'll see the forecasts displayed but with the last five days removed. Other than this, the shareware version is identical to the commercial version in other respects. Naturally, it is far more profitable to use the commercial version, although much benefit can be derived from the shareware version. Whether you use Market Master to predict the prices of stocks, futures or market indices, you can feel confident that Market Master will help make your trading much more profitable. Your use of Market Master constitutes representation that you are fully aware of the inherently uncertain nature of forecasting, and in particular, financial forecasting, as well as the risks inherent in buying and selling in the financial markets, and that the output of Market Master does not constitute "advice" or "recommendations", and that past performance is no guarantee of future results. Copyright Information Market Master is copyrighted. Copyright(c) 1989-93 by RMC. You may not decompile, disassemble or reverse engineer any version of Market Master, nor modify Market Master itself without prior written consent from RMC, or act in any way that impairs the proprietary and intellectual property rights of RMC and the like interests of the publisher or distributors of Market Master, and their successors and assigns. RMC retains the title and ownership of the Market Master programs and support files but grants you a lease and license for their use, provided that you are the original owner of the program and abide by the terms herein. Except for the aforementioned lease and license, the author, manufacturer and publisher retain all rights to the Market Master program and support files and can make changes to them, or withdraw them from public use altogether, at their sole discretion and without notice. HARDWARE REQUIREMENTS IBM PC or compatible with 512K RAM, DOS 2.0 or later, and a minimum hard disk space of 950K (less than 1 Mb). While a VGA monitor would be best, any monitor will do. Note that for CGA monitors, the program picks the highest resolution which usually results in a two-color black and white display. DATA REQUIREMENTS For the one- or two-indicator Market Master, you only need the daily high, low, and close prices for each security, futures contract or market index you are tracking. The four-indicator version will also utilize, but does not require, volume data. You'll need a minimum of 18 days of data to begin a forecast. The maximum number of days of data the program will use is 62 days. The first 12 days of data are used as the initial foundation for Market Master 's analysis and are not displayed on the graphs that Market Master produces. Simply enter the data for at least the preceding 18 days from publications such as Investor's Business Daily or Wall Street Journal, or use the data files from a data bank source. Market Master assumes that the data are real historic observations and processes them with that assumption. Certainly if the numbers are false or inaccurate, the processing will be meaningless and computational failure may result. To avoid problems, always use real historic data. For best results, pick only actively traded issues for your analysis. Not only will the forecasts be more accurate, these are also the types of investment/trading vehicles that you'll want to use since they tend to offer the most opportunities for profit and the least slippage. Please note that volume information is not needed or used in the analysis by Indicator 1 or Indicator 2, but are used in analysis by Indicators 3 and 4. If you use the 1- or 2-indicator version, there is no harm in entering volume data if you wish to simply note it for the record and make your files ready for use with a more advanced version of Market Master at a later time. How to convert on-line data to work with Market Master Market Master uses dBASE file format for its data files and records. Market Master will not accept real-time data, or data in DIF format. It can use data files that have been converted to specific ASCII format, or CSI or MetaStock format, and it also allows manual entry of data via the keyboard. If you wish to do data/file conversion, two optional file converters are available from us: 1) ASCII File Converter (C1) converts certain ASCII data files (such as Future Link, Future Source, AIQ and PRN text files) to work with Market Master's dBASE format. The ASCII data must be comma delimited and in the following format: YYMMDD for date, plus price data (High, Low, Close) and volume in any order. All fields in each record must be separated by a comma, although extraneous fields are okay, e.g. symbol field, open interest field, etc. Additionally, each record must reside on just one line (i.e. end with ). For example," 920118, 20, 17, 18.5, 3579 " is fine, so is "XYZ, 920118, 20, 17, 18.5, 3579 ". The ASCII file converter does not work for ASCII data separated by blank spaces. Typically you have five fields: Date, High, Low, Close, Volume, although more fields are permissible and the fields can be in any order. You will need to check with your data source whether data provided is in the above format. 2) Metastock/CSI Converter(C2) converts data files from CSI, Metastock, and Computrac data formats to dBASE format. HOW TO INSTALL MARKET MASTER Create a directory on your hard disk using whatever directory name you like (e.g., MM or MMASTER) and copy all the Market Master files from the floppy disk over to this newly created directory. Next, go to the newly created directory containing the files you just copied. Type "GO" and press the key to extract the compressed files that are now on your hard disk. That's all there is to the installation! If you have upgraded to a higher or newer version of Market Master and wish to continue to use your data files, you should first install the newer version in a new directory. Then copy all your old data files into this new directory. HOW TO USE MARKET MASTER After installing Market Master as described above, you should temporarily insert the original disk (the "key disk") in the floppy drive when Market Master checks for its presence. Otherwise, the program will not run. You can remove the disk after the check. To run the program, go to the directory containing Market Master. Type "GO" and press the key to begin. After the introductory screens, the main menu will be displayed. From this menu, you can choose to: 1) View a demonstration file 2) Create a new file or retrieve an existing file, or 3) Exit the program ABOUT DEMONSTRATION FILES: Demo files all end with a hyphen so that they are easily identifiable. These demonstration files are also working files whose data can be updated, edited, deleted, etc. TO CREATE OR RETRIEVE A FILE If you want to do your own analysis, enter the name of the file you wish to create or want to use. If that file has not been previously created, Market Master will automatically create it for you so that you can begin data entry for that file. Market Master automatically adds the file extension, "DBF" (data base file), to all data files. For example, if you want to track IBM stock and name your file "IBM", simply type "IBM" when Market Master asks what file you want, then press the key. If a file named "IBM.DBF" already exists on the disk, it will be automatically fetched and opened. If the file does not exist, it will be created. To view the list of all the existing files, type "?" and press the key. Press the first letter of the file name and/or use the up and down arrow keys to scroll through the list and select the file you want to open. Then press the key to open that file. THE COMMAND MENU Once your data file is chosen (or created, if not found on the disk), you will be presented with a command menu similar to those found in spread sheet programs such as Lotus 1-2-3. You will see a line at the top of the screen with "Record #" (that tells you which record you are viewing. A new file will say 0 of 0.), "File:" (the name of the file you are viewing), and "Last Update" (today's date). You move (i.e., cycle) from one command to the next by pressing the space bar or the arrow keys. As you move from command to command, a description of the function of the high-lighted command will be displayed on the last line of the screen. Use the space bar to move to the different commands and familiarize yourself with the functions of each command. Note that the DELETE command is a toggle in that it will alternate between the functions of DELETE and UNDELETE. The following is a listing of the commands, and their respective function and purpose: (We first present the command, followed by its function, then followed by its purpose.) COMMAND: 1st FUNCTION: Use first indicator to forecast PURPOSE: Displays price forecast and graph using first indicator. COMMAND: 2nd FUNCTION: Use second indicator to forecast. PURPOSE: Displays price forecast and graph using second indicator. COMMAND: 3rd FUNCTION: Use third indicator to forecast. PURPOSE: Displays price forecast and graph using third indicator. COMMAND: 4th FUNCTION: Use fourth indicator to forecast. PURPOSE: Displays price forecast and graph using fourth indicator. COMMAND: CrOvr FUNCTION: Crossover analysis of 5-day and 11-day moving averages. PURPOSE: Displays a graph of 5- and 11-day moving averages. COMMAND: View FUNCTION: Browse file in table format. PURPOSE: Line by line display of data in file with new commands. COMMAND: Next FUNCTION: Display next record. PURPOSE: Displays the next record in the file. COMMAND: Prev. FUNCTION: Display previous record. PURPOSE: Displays the previous record in the file. COMMAND: Top FUNCTION: Display first record in file. PURPOSE: Displays the first record in the file. COMMAND: Bottom FUNCTION: Display last record in file. PURPOSE: Displays the last record in the file. COMMAND: Edit FUNCTION: Edit currently displayed record. PURPOSE: Allows you to edit the record on the screen. COMMAND: Add FUNCTION: Append new record to file. PURPOSE: Allows you to add a new record to the file. COMMAND: Del FUNCTION: Mark current record for future deletion. PURPOSE: Marks the record on the screen for deletion. This is a toggle function. Strike once to delete. Strike again to undelete. COMMAND: File FUNCTION: Select another database file. PURPOSE: Returns you to the main menu and allows you to select another file. COMMAND: Quit FUNCTION: Quit to DOS. PURPOSE: Exits Market Master and returns you to the DOS function. TO SELECT A COMMAND FROM THE COMMAND MENU 1. Press the space bar to select the command, then press the key, or 2. Use the arrow keys to select the command, then press the key, or 3. Press the first letter of the command (e.g. N for Next,) or the number of the indicators (e.g. 1 for 1st). To display the desired record Use the following commands: "Next" to display the next record in the file. "Prev." to display the previous record in the file. "Top" to display the first record in the file. "Bottom" to display the last record in the file. TO ADD NEW DATA Select the "ADD" command. The program is designed to take in Date, High, Low, Close and Volume data. The cursor will first be positioned in the DATE field. Enter the date as YYMMDD. The cursor will then move down to the next field. Enter the high, low, close and volume respectively. The 1- and 2-indicator Market Master do not use the volume data and it is not necessary to enter the volume data. You may wish to key in the volume data if you plan to upgrade soon to a 4-indicator version which will use volume data. Once the last field has been keyed in, press the key and the system will process and save the information. To add data for another date, just select the "ADD" command again and proceed to enter more data. TO EDIT EXISTING DATA Select the "EDIT" command after you have displayed the record you wish to edit. The cursor will be positioned in the DATE field. Move between the fields using the arrow keys. Key over the data you want to edit/change. When you are finished with editing the data for a particular date, press the key to save the information. To edit another set of data, select the "EDIT" command again and proceed to edit more data. TO DELETE DATA Note: The DELETE command is a toggle in that it will alternate between the functions of DELETE and UNDELETE. Select the "DEL" command after you have displayed the record you wish to delete. The word "DELETED" will now replace "RECORD" on the left upper corner indicating that the record has been marked for future deletion. To undo the DELETE command (to UNDELETE), select the "DEL" command again. You can UNDELETE any record marked for future deletion at any time prior to viewing a forecast graph or exiting the file. Once you have used an indicator to forecast or have exited the file, all the records marked for future deletion are permanently deleted. Records marked for deletion are not used in the forecasts. TO SELECT ANOTHER FILE Selecting the "FILE" command will return you to the main menu and allow you to select and open another file. THE VIEW / BROWSE MODE The use of the View command immediately provides you with a line-by-line display of data records in table format (also known as the "Browse Mode"). Once you are in View or Browse mode, the Lotus-style menu will no longer be operative. Instead, use the new commands as described on the top of the screen to navigate or manipulate data. You can use the arrow keys to move from record to record, and from field to field. You might find the View mode more convenient for adding (i.e. Appending), updating (i.e. Editing) or deleting records, but this is largely a matter of personal choice. The following are the commands found in the VIEW mode: ^U = DELETE (WHILE HOLDING DOWN THE KEY, PRESS THE KEY). It is the same as the Delete/Undelete toggle in the aforementioned Lotus-style command menu. You can mark each line of record as Deleted or Undeleted using the Control-U key combination. Use the arrow keys to move and select the record you wish to delete. Then press ^U. The record will then be marked for future deletion. To UNDELETE, press ^U again. The records marked for future deletion will remain on the screen until a forecast is made using one of the indicators or until the file is closed. You can UNDELETE any of these marked records any time before you use an indicator to make a forecast or before you exit the file. F2 = EDIT Use the arrow keys to select the data you wish to edit. Press the key to mark the data and then key over the data you want to change. F3 = APPEND / ADD Press the key and a message will be displayed on the bottom of the screen: "Proceed to append record? N". If the answer is yes, key in a "Y". The cursor will be positioned at the top of the screen where a new line has been created for the new data entry. Key in the data for the record you wish to add and press the key when you are done. To add another record, Press the key again. F5 = GO TO To go to a specific numbered record, press the key. A message will be displayed at the bottom of the screen: "Go to record __". Key in the number of the record you wish to view and the system will display that record as the first record on the screen. F6 = FIND To find the record for a specific date, press the key. A message will be displayed at the bottom of the screen: "Find YY.MM.DD" with the default date being the date of the record on which the cursor was resting. Key over the default date with the date of the record you wish to view. Be sure to key in the periods between YY, MM and DD. The system will display that record as the first record on the screen. ENTER / ESC Press the or key to exit the View mode and return to the main data screen and the Command menu. HOW TO INTERPRET THE MARKET MASTER FORECAST GRAPHS The Difference Between The Indicators The indicators differ in their different methods of analysis and forecasting of the market and in their leading characteristics: Statistically, Indicators 3 and 4 predict earlier than Indicators 1 and 2, although this may vary depending on the situation. Each indicator also provides a different perspective of the market. Viewed together, the battery of indicators provides a comprehensive overview of different impending market forces acting to bring about the predicted price change. By way of illustration, if one wishes to know what the interior of a car looks like, he gets a lot of information by looking through the front and rear windshields. However, if he is further able to look through each of the side windows, he will get the best assessment of the car's interior. There will be instances when some of the forecasting indicators do not agree. To be most conservative, choose only those opportunities where all the forecasting indicators agree and the forecasted price change is large. Interpreting The Graphs The analysis and forecast graphs generated by Market Master use data from the last 62 days. The first 12 days of data serve as the initial foundation for analysis and are not displayed ( nor are the daily highs, lows and volume, even though they are used in the analysis). Thus up to 50 days of closing prices and analysis are displayed. The latest data and forecast are displayed on the rightmost end of the graph. For each analysis and forecast, a graph display with 3 lines will be presented: The blue (or dotted) line is the closing price line showing the actual closing prices for up to the last 50 days. The yellow (or solid) line is the forecasting indicator line which forecasts the probable future price direction and target. The green (or dashed) confirming indicator line confirms what has been forecasted and serves to justify a planned position-it will help keep you from entering or exiting the market prematurely. The confirming indicator confirms whether the actual price has topped or bottomed. This is useful because of the substantial lead time that forecasts can sometimes precede a price turning point. It is not unusual for a market to be bearish as indicated by the forecasting indicator line, and yet the prices do not decline right away, and vice versa. After knowing the market will be bullish or bearish from the forecasting indicators, whether to establish or to keep a position can then be determined by referencing the confirming indicator. A bullish position is well justified if the forecasting indicator is bullish (i.e. substantially above the closing price) and the closing price remains above (and NOT equal to) the confirming indicator. The case for a bearish position is well justified so long as the forecasting indicator is bearish (i.e. substantially below the closing price) and the closing price remains below (and NOT equal to) the confirming indicator. By comparing the forecasting indicator line with the closing price line and the confirming indicator line, you can immediately determine the near-term price outlook. In general, if the forecasting indicator line is above the closing price line, and the closing price line is above the confirming indicator line, a bullish position is justified. This is so because the forecasting indicator is telling you that the future price/direction will be above the current price and this is further confirmed by the closing price line being above the confirming indicator line. Conversely if the forecasting indicator is below the closing price line, and the closing price line drops below the confirming line, a bearish position is justified. Moreover, the degree of bullishness or bearishness can be gauged by the amount that the forecasting indicator line is above or below the closing price line. A deteriorating bullish situation (i.e. one less bullish) is indicated where the forecasting indicator line, although above the closing price line, is rapidly dropping or moving towards said closing price line. Conversely, a decreasingly bearish situation (i.e. less bearish) is one where the forecasting indicator line, although below the closing price line, is moving up relative to said closing line and approaching it from below. Theoretical buy signals are triggered where the forecasting indicator line is above the closing price line which in turn crossed above the confirming indicator line. Theoretical sell signals are triggered where the forecasting indicator line is below the closing price line which in turn crossed below the confirming indicator line. In practice, you would want to pay attention to the magnitude of future price movement by comparing the target price (as indicated by the forecasting indicator line) with the current price (as indicated by the closing price line) to see if it is of sufficient magnitude to justify a trade, after taking into consideration commission, slippage, frequency of trading and other personal preferences, etc. For a bullish forecast, buy when the closing price is above the confirming indicator and the magnitude of upside movement, as shown by the forecasting indicator, is sufficiently large. For a bearish forecast, sell when the closing price is below the confirming indicator and a sufficiently large downward movement, as shown by the forecasting indicator, is evident. The amount of lead in each forecast is highly data dependent. The nature of the underlying stock, future, index or mutual fund, does affect the amount of lead time. If you do not want to rely on confirming indicators (which tend to be conservative), it is advisable to adjust for the amount of lead time by referencing recent forecast history. For example, if for a certain stock, the buy signals from the forecasting indicator tend to come a day before the true price bottom, then you would want to take that into account in planning your entry or exit, particularly if you do not want to wait for the confirming indicator to confirm. Likewise, if the sell signal for this same stock tends to come 3 days ahead of the true top, you would want to consider waiting for about 3 days after a bearish forecast, or until the signal is confirmed by the confirming indicator, before selling or going short. Each stock, futures contract or security has its own peculiar lead time for the buy and sell signals and an examination of the graphic display given by Market Master will usually provide the clue as to how much time adjustment to make. Or you can wait for the confirmation from the confirming indicator. Please note that as situations warrant, Market Master rescales the forecasting and confirming indicator lines before predicting the next period in order to provide more useful forecast displays for better decision-making. For bullish or long positions, it is advisable to arrange the price targets or price changes in ascending order for planning purposes. It is important and desirable to open a position only at or near a price turning point. This is so because at a price turning point, your risk is least and your profit potential is maximized. For example, if the price of a stock is currently at a turning point and selling for $50 and the forecasts are as follows: Indicator #1 #2 #3 #4 Target $52 $51 $54 $53 You would rearrange the various targets in ascending order as follows: Indicator #2 #1 #4 #3 Target $51 $52 $53 $54 Your expectation then is that the price will first move to $51, then $52, then $53, and finally $54 under ideal conditions. However, since circumstances are rarely ideal, you may expect some corrections on the way up. Let us assume that subsequently the price moved to $53.25 and then drops, you will learn that the lowest 3 targets are met for the earlier turning point at $50. This will serve as a guide to utilize the lowest 3 targets as realistic short-term goals at the next price low (i.e. bullish price turning point), that way, you will not hold for unrealistic moves in the short-term. Strategies can be highly important in the success of your trading. This is an area that is outside the scope of Market Master, which deals only with forecasting. Generally, it is highly advisable to trade in stocks and instruments that are optionable. There are, for example, more than 800 stocks that have options. As an example of a bearish or short position, let us assume that the stock is trading at $100 and is at a price top (i.e. bearish price turning point) and the following forecasts are obtained: Indicator #1 #2 #3 #4 Target $96 $97 $94 $95 You would rearrange the various targets in descending order as follows: Indicator #2 #1 #4 #3 Target $97 $96 $95 $94 Assuming that you are satisfied that you are at or close to a price peak and want to go short, you may wish to free yourself from the risk of unexpected upside swings. You may, for example, choose to buy a short-term, at- or out- of-the-money call for each 100 shares that you go short at $100. Alternatively, you can buy a straddle with strike price of $100 and then go short 100 shares for each straddle, which is an even more bearish strategy. The advantage of such approaches are that you largely eliminate the anxiety that unexpected upside movement may bring. Additionally, the need to be very accurate and precise about the true price top is somewhat reduced. Let us assume that prices then drop to $94.5 before rebounding. From this experience, one may tentatively conclude that the lowest four magnitudes of price movements are realistically achievable in the short term when first obtained at a price top (i.e. bearish price turning point). This is helpful to know because in a bear market, increasing number of downside targets from a price peak will be quickly reached in the short-term and decreasing number of upside targets will be achieved from a price bottom. Such experience and observations help to assess the overall condition of the market (i.e. bullish or bearish). If you find upside targets are hard to meet and downside targets are readily met, it is an indication that short positions are to be favored, and vice versa. Typically, you would adopt a strategy wherein you would be prepared to close out if a certain number (based on prior experience) of nearest price targets (originally forecasted from a price turning point) are met. Even if the forecasts indicate a very substantial additional movement remaining, it would be prudent to take some profits. It is also important to stay out of situations that are not clear cut or not rewarding. In trading, there should be no egotism, only pragmatism. Interpretation Of Crossover Analysis In addition to the 4 forecasting indicators, a cross-over analysis of the 5-day and the 11-day moving averages is also available. At the Main Menu, press 'C' or choose 'CrOvr' command to activate this analysis. In this analysis, the yellow (solid) line would represent the 5- day moving average, while the green (dashed) line would represent the 11-day moving average. The interpretation is classic; i.e., when the faster indicator (i.e. the 5-day moving average) is above the slower indicator (i.e. the 11-day moving average), it is bullish. Conversely when the faster indicator (i.e. the 5-day moving average) is below the slower indicator (i.e. the 11-day moving average), it is bearish. Printing the graph on the screen If you wish to print the graph displayed on the screen, you should turn on you printer, make sure it has paper and then select your printer type. In a few seconds to a minute or more (depending on your printer), the graph will be transferred from your screen to your printer. After the printer is finished with printing, the program presents you with the Main Menu for further instructions. Currently, for hard copy graphic output, we support all printers that are compatible with Epson-FX, HP-Laserjet, Epson-MX or IBM Proprinter. Be sure to set your printer to the proper emulation mode if it is other than the above named. TRADING TIPS Mutual Funds Since these don't have daily high, low and close prices, the best approach is to forecast the index itself, if the mutual fund is an indexed fund. For example, if your mutual fund consists of OTC stocks, then it should closely follow the OTC (NASDAQ) Index. Simply enter the high, low and close for the Index and use the NASDAQ volume. Likewise, if your mutual fund is indexed to the S&P 500 Index, you may then use the daily NYSE volume as the volume, and the daily high, low and close of the S&P 500 Index. Alternatively, you may use the high, low and close of the Dow Jones Industrial Average. In other words, always look for the Index that closely follow the fund. For example, use transportation index for transportation funds and utility index for utility funds. A note on volume data: It is not necessary to be exact on volume data; you can use the first three significant digits, which will be accurate enough. The accuracy of price data is more important, and should be exact, if possible. Sector funds may require special treatment. For example, to track a gold fund, first determine what is the major stock or stocks comprising that fund. A simplified approach is then to forecast the predominant stock within said sector fund. A more refined approach is to synthesize an index based on the top stocks comprising that fund, e.g., by taking the mean or average of their daily highs, lows, closes and volumes. A still more refined approach is to further weight the component stocks according to their share of the total fund value. The ultimate position is to weight every stock comprising the fund to generate the synthetic index, in arriving at the synthetic high, low, close, and volume. However, don't get carried away with this, as a point of diminishing returns is quickly reached. FUTURES You can use Market Master to trade all futures including index futures, S&P 500, all agricultural futures (corn, pork belly, wheat, etc.), currency futures (Yen, Deutsch Mark, Swiss Franc, British Pound), energy futures (crude oil, gasoline), precious metals (gold silver, tin), interest rate futures (treasury bonds, GNMA), and overseas futures such as rubber, freight, etc.. Because volume data are not reported at the end of each day for futures contracts, one must enter an approximate or estimated volume, unless you decide not to use volume data at all. You cannot just leave the volume figure as "0" when you have volume figures for previous records. Any reasonable volume figure will do (e.g., just enter previous day's volume as today's, and a day or two later, when the actual figures come out, edit the old numbers to reflect the true figures now available). If you leave the last day's volume as "0" when the preceding figures are not "0", the forecasts will become inaccurate for Indicators 3 through 4. You must either provide volume data for all the records in a file or for none of the records, unless you use Indicators 1 and 2 only, in which case volume data are not used and therefore irrelevant. Because futures contracts expire, you should follow the different expiration months simultaneously so that if the nearest expiration expires, you have the next nearest to follow. It is advisable to follow at least two of the nearest expiration futures (i.e., two that are about to expire) so that if one expires, pick the next nearest one and add the second nearest to expiration contract (so that you again have 2 contracts to follow). STOCK OPTIONS If you wish to use Market Master for stock options, we suggest that you forecast the underlying stocks instead of the options themselves. If you wish to trade stock index futures, we suggest that you analyze the underlying index itself. For example, for the S&P 500 futures, it would be much better and more accurate to forecast the S&P 500 cash index by using the daily High, Low and Close of the cash index itself and by using the total New York Stock Exchange volume as a proxy for the volume of the 500 S&P stocks. Likewise, for OEX options trading or stock index futures options trading, the underlying cash index should be analyzed instead. Not only will the results be more accurate, the data is readily available and not delayed. Moreover, you avoid the problem associated with expirations as would exist if you were to analyze the futures or options directly. In the case of non-market- index futures such as agricultural commodities, you may have no choice but to use the data relating to the particular commodities. Besides stocks and futures contracts, areas where Market Master can be useful include the forecasting of the Dow Jones Industrial Average, a market index that has a High, Low, Close for each day. As for volume data, simply use the New York Stock Exchange Volume in lieu of the volume for the 30 industrials. This is preferable to no volume at all. You can use the signals for the broad market averages to switch between stock and money market funds without commission if you switch between no-load mutual funds. STREET SHENANIGANS It is taboo to talk about what goes on behind the scenes on Wall Street and that's why you don't hear about it. However, we believe the public deserve to know at least a little. What we reveal here is just the tip of the iceberg, sufficient to pique your interest so that you will no longer have any excuse for being the innocent and naive investor/trader. It is not our intention to provide you an education on Wall Street chicanery, as time and space do not permit this. However, any sufficiently motivated investor/trader will embark on the rewarding path of discovery once shown a glimpse of the machinations of Wall Street, and that's what we intend to do here -- show you a glimpse. We'll even give you some examples of profitable applications. But the rest is up to you. You can go as far as you want to as there is no limit to your discoveries and financial rewards. If you enjoy detective work and making money along the way; you may yet find your calling. First, be assured that it is extremely easy to manipulate the stock market, and there are many ways to do it. And because it is so extremely profitable and easy to do, it is done every day. For example, an influential Wall Street firm may "downgrade" a stock to flush out the sellers just before covering their short position in the firm's own trading account. Or the firm may "upgrade" its recommendation on a stock after covering short and going long. Such sure sources of "fast cash" routinely enable many Wall Streeters to rake in multi-millions in annual personal income. Not a bad living at all when one can leisurely pick up in a month what most hard-working American families cannot hope to accumulate in a life time. And it doesn't take brains or special ability, much less hard work or scruples. As always, Wall Street's game plan is much more effective and the profits much larger if it is carried out in a coordinated way, as it usually is. You, John Q Public, however, would not be the perpetrator, but the keen observer. Your goal is to try to ride on the coattails of these financial Goliaths to your own financial independence while avoiding being financially trampled like the rest of the public. Don't ever expect to be invited to Wall Street's feast. You simply go incognito and uninvited. Be content with inconspicuously nibbling away at the crumbs near the edge of their table. Stay invisible and make no noises, or you'll be bounced out from the Street party in a flash. With the right attitude, you'll be able to consistently squirrel away from Wall Street what is rightfully your due. To profit from such Street shenanigans, you do need to do some home work in order to buy (or cover) near price bottoms and sell (or short) near price tops. Most of the time, all it requires is daily analysis with MarketMaster, close observation, and patience. Let’s first discuss the issue of when to buy. Ideally, you want a stock that has declined sharply and that has been touted by Wall Street (even as they unload it) on its way down. After it has dropped very substantially a red flag is flashed if this downtrodden stock is somehow suddenly and belatedly "downgraded" by Wall Street at what is already rock-bottom prices. The public’s emotion at this point, having faithfully held on to the stock and ridden with the losses all the way down, is one of despair and fear, and their inclination is to either sell long (throw in the towel) or go short (in a vain hope to recoup) the stock when the media is full of planted "reasons" for why it must be sold "at once". To succeed in this business, you need to keep any "herd instinct" in check and control your natural and emotional reaction to news plants and disinformation, and be ready to go against the crowd. Follow MarketMaster particularly closely, as almost invariably it will soon point to unusual bullishness and prevent you from becoming a perfect contrary indicator. In fact, while the crowd is selling long and selling short at rock bottom prices thanks to Wall Street's "advice", it is early warning to you that it is time to get ready, at least psychologically, to cover short and, somewhat later, go long. However, to determine if the nearby important price support level for this downtrodden stock will hold or if record lows will be made, you must analyze it closely with MarketMaster. Typically, when Wall Street vigorously "downgrade" a stock, it may be days to several weeks before all the public's long positions are flushed out. This is particularly true if such "downgrading" is coordinated and sustained. One firm's "downgrading" may be followed by another firm's "downgrading". The key here is to closely monitor the pronouncements of major investment firms on the subject stock by listening to their "news" dissemination while double-checking with MarketMaster. Be aware that such sustained "downgrading" may lead to prolonged price depression in the subject stock. Both the public and the institutional investors need time to digest and obligingly carry out the sell "recommendations" of Wall Street. Obligingly, Wall Street is surprisingly "patient" and "understanding" at this critical juncture with their repeat "warnings" so that the public may at last sell or go short at price bottoms with utmost confidence and courage. While this can be fascinating as you look ahead to the bullish opportunity that is unfolding, be sure to use the confirming indicator of MarketMaster to help keep you from buying too soon. Remember, "a penny less paid is a penny earned", and a lot of times you are making money simply because the stock you'll ultimately purchase is getting cheaper each day. Your goal is to pick up the depressed shares from the "clients" of Wall Street firms at the lowest possible price above $0. Your reward/risk ratio is much improved as the stock sinks to important price support levels, or even new lows. Our description here is necessarily limiting in that the whole process is a bit like bicycle riding. You learn and profit most by actively participating, experiencing and doing, initially with paper trades if necessary, but ultimately with real cash. When you finally place your order to buy, do it in steps and ease yourself in with multiple trades over multiple days. In general, the more belated, severe and sustained the "downgrading" of a stock by Wall Street, the greater the need for patience and the greater the percentage of subsequent price recovery from price bottoms. After getting in at price bottoms, follow the stock closely with MarketMaster and be prepared to take some quick and early profits. Just remember that while you were nibbling to build your very modest long position, Wall Street was hauling in public shares by the truckloads to "maintain an orderly market". Used to "fast cash" and instant gratification, Wall Street will always lighten up a bit on its massive inventory as the prices rise from their rock bottoms. Likewise, you should reward yourself with some profit. As often happens, Wall Street Goliaths loathe successful bottom fishers who cling to their coattails and will engineer a "retest of the low" to shake you out. Having taken some profits, you now have extra profits and cash and therefore stand ready to replenish at the artificial price dip for another fast and profitable trade. To gain insight into Wall Street’s game plan, pay particularly close attention to what MarketMaster has to say. Conversely, when a stock is "upgraded", there is often a waiting period during which buyers are exhausted of their cash by Wall Street's short sales before the stock price will decline. The more firms there are "upgrading" a stock at price highs, the more sustained will be public buying and the more patience is called for before going short. Ideally, you want a situation where a stock had a meteoric rise to a lofty peak as a result of heavy "upgrading" by Wall Street, then declined, and now once again being pumped up by Wall Street hype to re-approach its earlier lofty perch. Ideally, you want the maximum number of investment firms touting the stock in this second wave of induced public buying prior to establishing your short position. This ensures that all potential buyers will have been hyped out of their reluctance and ignorance into buying. Once this heavy public buying is exhausted by Wall Street’s corresponding heavy short sale, a decline is inevitable, with a severity proportional to the earlier-manufactured public euphoria (or compulsion). As stated earlier, gradually build up your short position and protect all short positions with calls, straddles, warrants and like instruments as you open them. Again, be prepared to take some profits after a significant decline has occurred. Follow the situation closely with MarketMaster. There are times when a stock is at or near its highs, and suddenly, it drops as a result of "downgrading" by some Wall Street firms. This is an indication that the firms are net short the stock. Of course, if you are not yet short the stock, it may mean that you missed the top. Nonetheless, Wall Street firms are extremely trading-oriented, because that’s the way to optimize rate of return, and their transaction costs are virtually zero. Therefore, there is some chance that upon short-covering, the stock price may rebound (although usually not to the level of the recent top). At this rebound, you may want to set up your bearish position(s). Again, it is important to ease yourself into the position(s) in steps rather than in one single trade. Again, always protect your short position(s) with calls, LEAPS, warrants, convertibles and other appropriate strategies. MORE STREET SHENANIGANS There are certain times during the day when one may gain a glimpse of the intentions and agendas of Wall Street. Lunch hour is a good time for the Street to try to make prices "look good" or "look bad". The only disadvantage to the Street is that such cosmetics may not last if the “bait” is not taken, since there are two to three hours to go before the market closes. Therefore, the last half hour of the trading day can be important. It is much easier to drive up or down prices during the last half-hour or so to create the required cosmetic “look” during prime time news. To drive prices up and to help generate public bullishness, Wall Street will tend to concentrate its buying in the last half hour of trading, particularly if earlier lunch-hour makeup did not quite do the job. Likewise, to generate public bearishness, Wall Street may concentrate selling during the last half hour of the trading day. Such "bullishness" or "bearishness" tend to carry over to the next day’s opening. If you are a keen observer, you'll usually figure out what Wall Street's short-term agenda is likely to be and profit from this insight. Of course, you will gain further insight by checking your assessments against the forecasts provided by MarketMaster. For analysis of very short-term activity, you will need the magnifying power of the intra-day version of MarketMaster, which will permit hourly or half-hourly studies, in addition to end-of-day analyses. Other than IPOs, there are times when Wall Street firms will offer to sell you stock without commission. Beware. There is no free lunch on Wall Street. Check with MarketMaster and you'll often find that the stock is ripe for short sale. Years ago, before the existence of MarketMaster, we were able to compile very profitable short-sale lists from the stocks regularly offered "net" (i.e. without commission charges) to the public by a leading brokerage firm. The firm routinely used this method to unload its "slow-moving" inventory to the public, who typically keep the stock (i.e. remove from circulation) after purchase rather than trade them (i.e. return to circulation). Were the leading brokerage firm to dump its stale inventory on the floor of the exchange, it would have lead to sharp price breaks and cost many times the waived commission charges. Typically, the account executive who sells the stock will be given extra commission and/or payout by the brokerage firm directly but the public buyer is not supposed to know this. There are times when the stock is so bearish that the account executive is offered double commission by the brokerage firm while the public is charged none. This is a potent indication that the stock is extraordinarily bearish. In all cases that we studied, the stocks involved tumbled badly within a few weeks, resulting in severe losses to the public customers who thought they were saving commissions on good, timely stocks as touted by the firm. TECHNICAL SUPPORT If you have a technical question about or need technical assistance with Market Master, please call 408-773-8715. If your call cannot be answered right away, we'll try to return your call, collect, at the preferred time you indicate. If you desire to upgrade to a newer or more advanced version of Market Master, please call 408-773-8715 for more instructions. RMC, P.O. Box 60842, Sunnyvale, CA 94088-0842, USA Acknowledgment: IBM, Investor's Business Daily, Wall Street Journal, dBase, MetaStock, CSI, S&P 500 and Lotus 1-2-3, Future Link, Future Source, AIQ, PRN, Computrac, and Warner are trademarks of their respective owners.